High Yield Trust Deed Investments — How do they work?

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Before we can talk about Investing in Trust Deeds the reader has to know the meaning of some of the key words.

Definitions  

  • Hard Money Loan = An investor writes a check to fund the loan. It is real hard cash money that is lent to a real estate owner who is borrowing money.
  • Soft Money Loan = The seller of a piece of real estate carries back part of the purchase price as a First, Second or Third trust deed loan, on a property sold. No check is ever written to fund the loan. Therefore, there is no hard money used.
  • Loan to Value = A financial term used by lenders to express the ratio of a loan to the value of an asset purchased. The term is commonly used by banks and building societies to represent the ratio of the first mortgage line as a percentage of the total appraised value of real estate. Example $100,000 first mtg / $250,000 value = 40% loan to value

Is a Hard Money Loan Like a Bank Loan Made on the Residence you Live in?

It works the same as when you buy a home. The bank makes a First Trust Deed loan on 80% of the sale price or appraisal value -WHICHEVER IS LESS. Read more

Would you buy a business or home without an inspection report?

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Insurance companies figured out real fast that it is in their best interest to make sure that real estate buyers do what was in the best interest for the buyers – which is to protect themselves from the sellers.  Read more

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Consulting “By the Minute”

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Last week, at the end of the day, I was ready to go home, but because I had to wait for my wife, I could not. Not being one to lay back in my chair, and close my eyes, I had an idea. It has been months since I acted like a business buyer and went on the web to see who in the cloud also offered CPA Due Diligence services. To my amazement I came up on the first page!

Next, I put in due diligence services and I found dozens of listings related to due diligence computers. I am not young enough to compete with computers that do due diligence and I do not understand how a computer can even do “due diligence.” Will someone tell me how a computer smells fraud?   Read more

Fire & Water Restoration Companies

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In a video I did back in 2012, I talked about looking for a business that is mandated by law or by life. The insurance business does not stop or slow down because of an economic slowdown.
It is a great industry to be connected to if you do not want to worry about economic issues. Even the pandemic of 2020 has not affected the number of insurance claims coming into my office. Homeowners file claims in good and bad times. Fires, floods, hurricanes, and tsunami do not care about economic conditions.

Overview

Let me explain my relationship to the Fire & Water Restoration industry. I have been a business broker selling main street businesses for 25+ years. I also am a CPA that does the necessary due diligence when a buyer finds a business they want to buy. I have done my share of fire and water restoration companies over the many years. Lastly, I own a landscape inspection company that does inspections for insurance adjusters on their claims received when it involves damaged landscaping, usually due to fires or floods.

In this article we are going to talk about the pluses and minuses of being in the restoration business. We will also address the reasons to buy or not buy a franchise. ServPro™ is the largest franchise in this industry. Read more

A Fresh Approach to Finding a Business

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If you have gotten tired of looking at the same old main street businesses, I would like you to know you are not alone.

You should be prepared to look for up to two years to find the right fit. Read more

What Business is Right for You?

The Best Way to Find the Right Business for You

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The time to get advice is early in the game, not after you have signed a purchase agreement and suddenly find that you have only 10 days to complete all due diligence

Many people look for a good, profitable business of any type. That makes sense… or does it?

People such as this are not picky as to the type of business as long as it makes money. Using this technique it is very common to look at a hundred businesses and even then to find out – after hours and hours of research – that what you learned did not agree with what you were told. Such an approach is one way to go about it.   Read more

Should I Buy a Corporation?

Does it makes sense to buy business in these COVID-19 crises times?

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As I was picking up my daily e-mails, the above question was staring me in the face. I thought, “Wow” this is a great question? What I have been noticing is the way consumer business is changing. A lot of those changes are permanent and not just in place because of the virus. Let’s look […]

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Business Evaluation Pitfalls: How to Evaluate the True Worth of a Business: Sanity Check-Buying A Business

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Getting the True Value of a Business.

In the business broker community there is a review process that helps a buyer determine if a business purchase makes sense or not. This check can be done by a Fortune 500 company where everything is figured down to the penny and takes 1000 hours of research or it can be done by a small main street shop buyer who figures it out in one hour. Each item in this review process requires a decision. Read more

Due Diligence Case Study

Due Diligence Case Study: Poor Bookkeeping Leads to Confusion

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This is a true story of one of my due diligence assignments regarding a thief operating from within a tree trimming and landscaping company in Northern California.

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Find Your Passion In Your Work When Buying A Business

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The most common comments I hear from business buyers are “What is a good business to buy?

I am open to any business that can make me money” They also bring up this question whenever they find any company that looks interesting. “Is this a good industry to be in?” What they are not getting is that every industry is a great industry for the few doing well and a terrible industry for the rest of the world. I would say that 50% of all business owners just barely get by, 30% do average, and 20% of the business owners make a profit that they are proud of. It has nothing to do with what industry it is but everything to do with the management of the company.

So if it is all about the management, how do you know if you are going to be good top management material?

Well there are several things.

Let’s review some of those traits. Read more